The Virgin Islands Public Finance Authority sold $458 million of matching fund bonds this week, providing $86 million for capital projects and refinancing hundreds of millions of dollars in existing bonds at better terms.
Of the $86 million, $20 million is slated for road improvement projects, $12 million for school improvements, $9 million for emergency management, $5 million for economic development investments, plus a wide range of other projects. The refinance bonds will save the government $30 million in interest costs, according to a Government House statement.
The bonds were sold at an all-in cost of 4.51 percent for the 30-year bond issue, the lowest interest cost ever achieved on a long-term financing by the Virgin Islands government. “Investors eagerly put in orders for the bonds, and over $2.3 billion of orders were received for the $458 million sold,” Gov. John deJongh Jr. said in the statement.
“This was a bond riot,” said Guy Logan, the Citigroup banker who led the financing team. “Institutional and retail investors vote with their money, and today, the investment community demonstrated its full support for the Virgin Islands program to build its rum industry.”
The bonds were rated in the triple-B rating category by all three of the national rating agencies, the first time that all three rating agencies have rated the government’s matching fund bonds. These ratings mean that the government can count on a positive market reception when it needs to raise capital for infrastructure purposes.
The investment banking team was led by Citigroup Global Markets, and included J.P. Morgan, Jeffries & Co., and Rice Financial Products.
Julito Francis, who as director of the Public Finance Authority managed the financing effort, said the results were better than the standards set out by Government House when the process began and the banking and legal team was assembled.
“We raised capital for our new money projects at historically low rates, and we refunded our older bonds at today’s lower rates," Francis said. "Everyone pulled together on this. We were able to hit the market at a great moment, and we achieved all of the goals that we set.”
